Which of the Following Statements About Goodwill Is Correct

question 21

Multiple Choice

Which of the following statements about goodwill is correct?

• A) Goodwill is classified as a current asset.
• B) Goodwill can be purchased or sold as a separate item.
• C) Under IFRS 3/AASB 3 goodwill must be amortised.
• D) Goodwill arises from many factors, such as customer confidence, superior management and a favourable location.

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Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a certain good or service at a lower opportunity cost than others.

Specialize

To focus on a specific area of knowledge, skill, or production, often improving efficiency and quality in the process.

Produce

To create, manufacture, or grow goods and products.

Heckscher-Ohlin Model

An economic theory that proposes countries export what they can most efficiently and abundantly produce, based on their factor endowments of labor, capital, and resources.